CA #2: Transitioning from a Service Business to a Consulting Business in 10 Steps
Read time: 2 minutes.
Transitioning from running a service-based business with a team to operating a solo consulting business can be a challenging and frustrating process. To make this shift smoothly, it is essential to maintain a steady income from your existing business while building your consulting venture. This way, you can ensure continuity and make the switch when you're ready.
Common mistakes entrepreneurs often make include:
1. Transitioning too soon, without adequate preparation, products, offers, clients, and structure.
2. Not testing the new approach and giving up prematurely.
3. Investing in a team, technology, and infrastructure before validating the new business model.
To help you successfully make the transition, here are 10 basic steps to follow:
1. Test the waters of consulting: Embrace the initial discomfort associated with any new opportunity. Begin by offering both free and paid consultations, starting with individual sessions and then progressing to packages of four or more consultations.
2. Gather insights: Learn from your experiences and take notes. After each consultation, create a scorecard with three rows: (1) how much you enjoyed the topic, (2) whether you would do this again, and (3) your stress level. Rate each category from 1-5 and include any qualitative comments.
3. Focus on your existing business: While validating your consulting idea and gathering insights, devote 90% of your attention to your current business and 10% to consulting.
4. Conduct at least 30 consultations before drawing any conclusions.
5. Analyze insights: Use the collected data to identify your preferences, "zone of genius," and the types of consultations and topics you should pursue.
6. Refine your consultation offerings: Begin charging or raising your prices, incorporate consulting into your marketing strategy, and start selling to more clients.
7. Shift focus: As you become more comfortable with consulting, adjust your focus to spend 70% of your time on your existing business and 30% on consulting. Increase your marketing efforts and build awareness for your consulting services, while still ensuring your current business generates 60%-70% of your revenue and covers all expenses.
8. Continue refining your approach to consulting and your consultation offerings.
9. Boost your marketing efforts for your consulting services. Once consulting accounts for 50% of your total revenue, shift your focus to prioritize consulting (70%) over your existing business (30%).
10. Wind down your old business or hire someone to manage it for you.
The above steps provide a simplified outline of the strategy I used to transition from running a marketing agency to establishing a highly profitable consulting business. While I have omitted hundreds of nuances, the most challenging aspect is taking the first step. Procrastination and overthinking are your biggest adversaries.
Give this approach a try for a few months and see what transpires. Many of my clients have successfully followed this method.
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